What are Therapy Caps?

Therapy caps are congressionally-mandated financial limitations on outpatient occupational therapy, physical therapy, and speech-language pathology services, except for those services provided in the hospital outpatient setting. Financial limitations of therapy services (therapy caps) were initiated in 4541(c) of the Balanced Budget Act (BBA) of 1997 and were implemented in 1999 and for a short time in 2003. Congress placed moratoria on the limits for 2004 and 2005. The moratoria have expired and, effective January 1, 2006, therapy caps were again in effect. The Tax Relief and Healthcare Act of 2006 has extended the exceptions process (implemented by The Deficit Reduction Act for calendar year 2006) to allow medically necessary services above the cap to be paid for by Medicare during calendar year 2007, and has been extended at least through June, 2008. The transmittals that explain therapy caps and exceptions are part of the following Medicare manuals located at http://www.cms.hhs.gov/Manuals/IOM/list.asp:
Pub. 100-02, chapter 15, section 220 and 230,
Pub. 100-04, chapter 5, section 10.2, and
Pub. 100-08, Chapter 3, chapter 13, section 13.5.1.
For further details see FAQ ID#7070. How do caps apply to outpatient therapy? For the transmittals related to the change request 5478, containing the policies changed for 2007, see the following: http://www.cms.hhs.gov/transmittals/downloads/R63BP.pdfhttp://www.cms.hhs.gov/transmittals/downloads/R181PI.pdf